Determining the present value of bonds payable Interest rates determine the present value of future amounts

Question: Determining the present value of bonds payable

Interest rates determine the present value of future amounts. (Round to the nearest

dollar.)

Requirements

1. Determine the present value of 10-year bonds payable with face value of $86,000

and stated interest rate of 14%, paid semiannually. The market rate of interest is

14% at issuance.

2. Same bonds payable as in Requirement 1, but the market interest rate is 16%.

3. Same bonds payable as in Requirement 1, but the market interest rate is 12%.

Solutions

Expert Solution

Step 1: Definition of bonds

A bond is a long-term liability that a company issues with borrowing a large amount of money. The bonds are issued by the company to fulfill the need of the xash. In this question the present value of the bonds is calculated.

Step 2: Calculation of the present value of bonds

In this, we take n= 20 and i=7%

The present value of the bonds is $77,557

Sahil Dangi answered 1 year ago

Next > < Previous

Related Solutions

Determining the present value of bonds payable and journalizing

Question Determining the present value of bonds payable and journalizing using the effective-interest amortization method Relaxation, Inc. is authorized to issue 7%, 10-year bonds payable. On January 1, 2018, when the market interest rate is 12%, the company issues $300,000 of the bonds. The bonds pay interest semiannually. Requirements 1. How much cash did the company receive upon issuance of the bonds payable? (Round to the nearest dollar.) 2. Prepare an amortization table for the bond using the effective-interest...

Determine the future value and the present value of the following single amounts: Future and Present...

Determine the future value and the present value of the following single amounts: Future and Present Values item Invested Amount Interest Rate Percentage No. of Periods 1 15,000.00 6 12 2 20,000.00 8 10 3 30,000.00 12 20 4 50,000.00 4 12

1. Determine the present value of five-year bonds payable with face value of $91,000 and stated...

1. Determine the present value of five-year bonds payable with face value of $91,000 and stated interest rate of 14%, paid semiannually. The market rate of interest is 14% at issuance. 2. Same bonds payable as in Requirement 1, but the market interest rate is 16%. 3. Same bonds payable as in Requirement 1, but the market interest rate is 10%.

Describe how to find interest rates and time requirements forproblems using present value and future...

Describe how to find interest rates and time requirements for problems using present value and future value.

Present Value of Bonds Payable; Premium Moss Co. issued $180,000 of five-year, 11% bonds, with interest...

Present Value of Bonds Payable; Premium Moss Co. issued $180,000 of five-year, 11% bonds, with interest payable semiannually, at a market (effective) interest rate of 10%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. $

Present Value of Bonds Payable; Premium Mason Co. issued $260,000 of four-year, 13% bonds with interest...

Present Value of Bonds Payable; Premium Mason Co. issued $260,000 of four-year, 13% bonds with interest payable semiannually, at a market (effective) interest rate of 11%. Determine the present value of the bonds payable, using the present value tables in Exhibit 4 and Exhibit 5. Round to the nearest dollar. $

Present Value of Bonds Payable; Premium Moss Co. issued $610,000 of five-year, 13% bonds, with interest...

Present Value of Bonds Payable; Premium Moss Co. issued $610,000 of five-year, 13% bonds, with interest payable semiannually, at a market (effective) interest rate of 11%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar. $

Present Value of Bonds Payable; Premium Moss Co. issued $100,000 of five-year, 11% bonds with interest...

Present Value of Bonds Payable; Premium Moss Co. issued $100,000 of five-year, 11% bonds with interest payable semiannually, at a market (effective) interest rate of 8%. Determine the present value of the bonds payable, using the present value tables in Exhibit 8 and Exhibit 10. Note: Round to the nearest dollar. $

The process of determining the present value is referred to as discounting the future amount. True...

The process of determining the present value is referred to as discounting the future amount. True False Multiple Choice Question 13 If $36000 is put in a savings account paying interest of 8% compounded annually, what amount will be in the account at the end of 7 years? $61698 $56780 $28878 $56160 Multiple Choice Question 19 If $37000 is deposited in a savings account at the end of each year and the account pays interest of 5% compounded annually, what...

The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations.

Finding the interest rate and the number of years The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations. If a security currently worth $12,800 will be worth $18,807.40 five years in the future, what is the implied interest rate the investor will earn on the security-assuming that no additional deposits or withdrawals are made? О 8.00% О 6.40% О 1.47% О 0.29% If an investment of $45,000...

Subjects